There’s renewed uncertainty over the future of the Croydon town centre redevelopment by Westfield, after the developers’ parent company announced in Sydney overnight that it is the subject of a £18.5billion takeover bid from French company Unibail-Rodamco.

The deal, which is subject to regulatory and share-holder approval, represents the biggest takeover of an Australian company on record. By acquiring Westfield’s 35 shopping centres in the United States and United Kingdom, Unibail-Rodamco will create the world’s largest mall operator. The French company said today that it plans to re-brand all its malls with the red Westfield logo.

The deal is a second major retail deal in a week, after Hammerson’s takeover of Intu for £3.4billion.

Work to demolish the Whitgift Centre won’t begin until 2019 – two years later than the mall was originally due to open

Westfield and Hammerson came together in Croydon in 2012 to form Croydon Partners to jointly deliver the redevelopment of the ageing Whitgift Centre and the unloved Centrale with a scheme, currently valued at £1.4billion, which now includes nearly 1,000 homes and which was granted planning permission by Croydon Council for a second time last month.

Today, international news agency Reuters described the Unibail-Rodamco takeover of Westfield as accelerating the “… consolidation of the global retail property sector as it grapples with challenges from online retailers led by Amazon”.

John Burton, Westfield’s London-based director who has overseen the company’s developments at Stratford, Shepherd’s Bush and Croydon, was “in meetings” this morning and not available for comment. His boss, Sir Frank Lowy, the company’s founder and chairman, is in London this week.

A good deal: Sir Frank Lowy secured the takeover of Westfield in just six weeks

The takeover will have far-reaching implications for the company, as it will end a 60-year association with the Lowy family. Lowy is a Holocaust survivor and refugee who was knighted for his services to business. He opened his first shopping centre in Australia in 1959.

“Unibail-Rodamco’s track record makes it the natural home for the legacy of Westfield’s brand and business,” Sir Frank said in a statement issued to the Sydney Stock Exchange earlier today.

If the deal goes through he and his two sons, Steven and Peter, Westfield’s co-chief executives, will walk away from the boardroom.

New management, with their own ideas and business priorities, might take a different view of the potential of spending so much cash on a suburban south London shopping centre which, first announced in 2012, has been stalled by wary developers since 2015. According to the Croydon Partners last month, work in Croydon is now not due to begin until 2019, with the centre opening for business in late 2022 – five years later than originally planned.

According to Reuters, “Shopping centre owners around the world are scrambling to reinvent themselves to keep up with rapid changes in consumer behaviour and boost earnings.

“The expansion of e-commerce giant Amazon.com has coincided with an explosion in online purchases of physical goods, while consumers increasingly treat malls as places for socialising.

“Once dominant United States department store operators such as Macy’s and JC Penney have announced plans to shut hundreds of stores in recent years, putting pressure on landlords to find new ‘anchor tenants’ or come up with new ways to grow returns.”

Westfield gets almost 70 per cent of its US$1.8billion annual revenue in America. The only “anchor tenant” secured so far for its Croydon centre is Marks and Sparks.

Westfield’s John Burton: no mention of takeover talks at last month’s planning meeting

“Westfield has been seen as a pioneer in US mall redevelopment, melding traditional mall retailers with atypical mall fixtures like upscale food courts, high-end restaurants, bars, cinemas and boutique fashion outlets,” Reuters reports.

Sir Frank Lowy said, “This is obviously a day of mixed emotions for me although I am 100 per cent comfortable with our decision.” He said the deal had taken just six weeks to reach an agreement.

The Lowys said they chose to sell as they would rather be investors than executives now, after putting in a combined 145 years at the company.

Westfield are generous donors to the Conservative Party in Britain. The company’s shares are headed for their worst year since 2011. The Unibail offer, at Aus$10 per share, is almost 18 per cent higher than Westfield’s stock price at close of trading on Monday. The offer has been unanimously recommended by Westfield’s board.

Christophe Cuvillier, chairman of the management board and chief executive of Unibail, said: “The acquisition of Westfield is a natural extension of Unibail’s strategy of concentration, differentiation and innovation. It adds a number of new attractive retail markets in London and the wealthiest catchment areas in the US. It provides a unique platform of superior quality shopping destinations supported by experienced professionals of both Unibail and Westfield.

“We believe that this transaction represents a compelling opportunity for both companies to realise benefits not available to each company on a standalone basis, and creates a strong and attractive platform for future growth.”

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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London.
Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com

Note Westfields complete and submissive attitude to this takeover. Fifteen years ago Westfield launched a hostile bid for the then Rodamco’s North American portfolio. Rodamco & Unibail merged their European portfolios a short time after this. This all suggests a consolidation of retail development into the Eurozone and less emphasis on over exposed UK/US market expansion. Things look a bit bleaker in the medium term development for the Whitgift centre.https://www.professionalpensions.com/global-pensions/news/1456649/rodamco-caves-westfield-bid

Recent news item on success of company making boxes for Amazon (and no doubt others) provides a glimpse of where retail is going. Furthermore we did 80% of our Christmas present shopping last Saturday in two large villages where they have some really good small shops selling unusual gifts. We did this last year and we’ll do the same next year. Easy, cheap parking and personal service was also a factor.

Their new shopping centre in Stockholm is pretty decent, this could be a positive and maybe help get some more European brands into our Westfield, if John Lewis if they think we are not good enough for them. Not sure how they are going to deal with Hammerson though. Kind of feel like Boris messed up by encouraging a joint partnership

This does appear to muddy the water over our own Westfield. One can only speculate what will happen. Who knows they maybe keen as mustard to get on with the build. Certainly I would hope they aren’t as slow as Westfield have been to date.

I wouldn’t be surprised to see one of Hammerson or Westfield sell out to the other.
Whatever happens this continues the slow and bumpy road to a new Whitgift.

I don’t think it is anything like John Lewis feeling that Croydon isn’t good enough for them. It is much more the case that they recognise the fact that retailing is changing and at a rate of knots that is both bewildering and amazing.

By the time the proposed Westfield might have been finished (note the cunning phrasing) the idea that retailers should commit vast capital sums towards the rental and display of a myriad of goods will seem silly and rather old-fashioned, just like internal combustion cars.

Why should they do that when you can display everything, in even greater variety and detail, on the net and not have to stock vast quantities of anything ever again… just in time has revolutionised the car industry and much the same practice will take over the retail trade.

For years I have been saying, a derided lunatic in the wilderness, that Westfield will not happen. I am surer than ever that I am right and I say that with no pleasure, only despair that our politicians and planners cannot really look to the future with any prescience.

Watch what happens when Boxpark goes, never to be replaced or missed, when the subterranean art gallery in the Fairfield sinks without trace, when the market in Surrey Street finally folds up its tents and disappears into the mists of history.

Grandiosity and hyper-scale is not the answer: shops and setups of the sort mentioned by David Wickens, shopping on the model so successful in Tooting, with nothing mega in sight, shopping and eating which reflects the community and the way people live is the way forward…that and the click and deliver joy of retail! Whew, I do feel better now.

The problem here though, is that you’re suggesting the council and planners should plan to remove 10s of millions of pounds of rateable value in a prime town centre location, and replace it with some small village shops..?!?

I’m sure David Wickens has impeccable taste in presents, but I suspect those quaint village shops only get frequented once a year for a reason, and the demand for unusual curiosities falls somewhat below the sales volumes needed to make town centre premises viable.

Hammerson / Westfield is a lot of egg in whitgift sized basket, yes. It’s a huge risk, yes. Will everyone like it, no.

But as I have said before, the council does not appear to be fighting potential developers off with a stick. H&W are the only show in town to take on a site of this magnitude.

I can see why the cooununcil don’t want to get caught sitting on their hands for another decade waiting for something different to come along.

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News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London.
Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com